GRAND RAPIDS — The announcement yesterday that Family Christian Stores plans to close all 240 of its stores in 36 states sent shockwaves through an already struggling industry.
That’s according to Sue Smith, chairman of the board for the Colorado Springs-based Christian Booksellers Association and a store manager at Baker Publishing Group, a Christian book publisher in Ada.
“It’s going to hurt Christian publications throughout the industry,” Smith said. “They had 240 stores all across the nation. That scattering of retail was very healthy for publishers, and it gave them leverage (over) other internet sales. Now that leverage is gone and it’s going to hurt sales in the future.”
Family Christian — the country’s largest retailer of Christian books and gifts — falls in line with a much larger retail trend. Legacy brick-and-mortar retailers have tried to cater to the widest possible demographic at a time when people are turning to online sellers like Amazon for their commodity shopping.
According to Smith, Family Christian Stores in recent years appeared to put far less focus on books and instead emphasized gifts and other merchandise, which sell at a higher profit margin.
“It’s just a really hard industry,” Smith said. “People are reading less and shopping with Amazon more, which just hurts the overall industry. There’s (fewer) people going to stores in general. It’s hurting all of us.”
Nonetheless, some real estate industry stakeholders believe the reports of the death of brick-and-mortar retail stores are greatly exaggerated.
“This has more to do with systemic financial issues that (Family Christian and MC Sports) have had over the years than the general retail climate,” said Rod Alderink, a partner focused on the retail segment at Grand Rapids-based commercial real estate brokerage NAI Wisinski of West Michigan. “We’re very bullish on retail.”
But many legacy West Michigan retailers have struggled in recent years. To that end, Family Christian was the second Grand Rapids-based retailer to announce its intentions to close locations in less than two weeks.
As MiBiz reported, sporting goods retailer MC Sports filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court of Western Michigan with plans to begin liquidating inventory and closing its 68 stores across the Midwest.
MC Sports failed to strike a deal with trade creditors, vendors and landlords to restructure the company’s balance sheet, opting instead to file for bankruptcy and liquidate its stores.
It’s a familiar process for Family Christian Stores, which two years ago went through a contentious bankruptcy process of its own.
Following the company’s emergence from Chapter 11, Family Christian executives said they thought they had a business model that would allow it to return to modest growth.
“We have a five-year plan and we don’t believe it’s double-digit growth,” Family Christian CEO Chuck Bengochea told MiBiz in 2015 following the company’s emergence from bankruptcy. “We believe there is single-digit growth, which the (Christian retailing) industry has not been experiencing, but we believe we can do that. Our model is very healthy. We have new stores in the model and good EBITDA earnings growth. But it’s not a high-growth business.”
Attempts to reach Family Christian executives were not successful.
Family Christian and MC Sports join other national, legacy retailers like J.C. Penney and Sears that have either announced plans to close a significant number of stores or have shut down locations.
According to Smith at Baker Publishing, savvy retailers can still find a path to success. However, it requires them to focus on a niche group of users, rather than trying to be all things to all people.
“You can get books anywhere, even with Family Christian gone,” she said. “It’s about who you want in your community, having connections to churches, having authors in your stores. When people walk in your store, they should feel a love of books. I don’t believe Family Christian exhibited that.”